The tax arm of the Labour Party government is set to claw back Winter Fuel Allowances from some older households.
HMRC warning for millions of state pensioners who ‘won’t get to keep money’
HMRC has issued a warning to state pensioners as it fleshes out how its clawback of the Winter Fuel Payment, worth £300, will work. The tax arm of the Labour Party government is set to claw back Winter Fuel Allowances from some older households.
Millions more pensioners will get Winter Fuel Payments this year after a government U-turn, but those with income of more than £35,000 won’t get to keep the money.
HMRC has now launched a new calculator, allowing people to check if their income exceeds the threshold. It says: “Check if HMRC will take back your Winter Payment.”
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State pensioners simply need to enter their country of residence and date of birth and select the types of taxable income they receive, as well as the amount of income they get for each type and whether they file a self assessment tax return or not.
Rachel Vahey, head of public policy at AJ Bell, said: “This not only creates tax chaos for over a million people but it creates a cottage industry for government to impose the clawback, creating additional admin which will cut into the estimated £450 million saving to taxpayers.”
Martin Lewis, the BBC and ITV star, and his Money Saving Expert team have advised: “If an individual State Pensioner earns over £35,000 this tax year (2025/26), their portion of the payment will be clawed back through the tax system.
“For most, this will happen automatically through pay-as-you-earn (PAYE), via a change in your tax code next tax year (2026/27).
“Though if you already file a self-assessment tax return (for example, because you’re self-employed or have a high income), then it will be clawed back through that. Self-assessment is done after the end of the tax year, so this will be done after April 2026.
“Crucially, the Government says that “no one will need to register with HMRC for this or take any further action.”